CFY CF Energy Corp

CF Energy Corp., (TSX-V: CFY) (“CF Energy” or the “Company”, together with its subsidiaries, the “Group”), an energy provider in the People’s Republic of China (the ”PRC” or “China”), announces that the Company has filed its audited consolidated financial results for the year ended December 31, 2022.

Results for the year ended December 31, 2022

In millions	2022	2021	Change	%		2022	2021	Change
(except for % figures)	RMB	RMB	RMB			CAD	CAD	CAD
Continuing Operations
Revenue	334.2	355.2	(21.0)	-6%		64.7	69.0	(4.3)
Gross Profit	107.7	134.0	(26.3)	-20%		20.8	26.0	(5.2)
Gross Profit Margin	32.2%	37.7%	-5.5%			32.2%	37.7%	-5.5%
Net Profit	4.0	21.7	(17.7)	-81%		0.8	4.2	(3.4)
Adjusted Net Profit (Loss)	(8.5)	25.5	(34.0)	-133%		(1.6)	5.3	(6.9)
EBITDA	76.0	77.4	(1.4)	-2%		14.7	15.0	(0.3)
Adjusted EBITDA	63.5	81.2	(17.7)	-22%		12.3	16.1	(3.8)

Revenue in 2022 was RMB334.2 million (approx. CAD64.7 million), a decrease of RMB21.0 million (approx. CAD4.3 million), or 6%, from RMB355.2 million (approx. CAD69.0 million) in 2021. Sanya City experienced two periods of lockdown due to outbreaks of COVID-19 in 2022. Deployment of the travel restrictions and lockdown measures severely impacted Sanya City’s tourism and retail sector which affected the demand for natural gas in the city. The pandemic first hit demand for natural gas in late March 2022, right after the peak season of the Chinese New Year holiday. Such decrease in demand partially offset the increase in revenue and sales volume gained in the first quarter of 2022 attributed to the recovery of the economy from the traditional peak season of tourist activity in the city. The pandemic affected the demand for natural gas again in August 2022 with the second city lockdown. These measures came at the height of the summer tourism season which severely affected the tourist industry and the travel retail sectors in August 2022 from recovery since the lifting of the lockdown in June 2022. Demand for natural gas from commercial customers in Sanya City did not pick up for the rest of the year until China government loosened its COVID policy and restrictions in December 2022.

Gross profit in 2022 was RMB107.7 million (approx. CAD20.8 million), a decrease of RMB26.3 million (approx. CAD5.2 million), or 20%, from RMB134.0 million (approx. CAD26.0 million) in 2021. Gross margin in 2022 was 32.2%, a decrease of 5.5 percentage points as compared to 37.7% in 2021. Lower gross profit and margin in 2022 were mainly attributable to the drop in margin of gas supply due to the increasing composition of revenue from residential customers with relatively lower margin, increase in purchase price of LNG which could not be fully transferred to customers in Sanya CNG vehicle station and the negative margin for the Integrated Smart Energy segment as fixed costs could not be fully absorbed with the decrease in revenue due to outbreaks of COVID.

In millions	2022	2021	Change	%		2022	2021	Change
(except for % figures)	RMB	RMB	RMB			CAD	CAD	CAD
Continuing Operations
Net profit for the year	4.0	21.7	(17.7)	-81%		0.8	4.2	(3.4)
Adjusting items
Fair value change on derivative financial instrument	(11.4)	4.8	(16.2)	-337%		(2.2)	0.9	(3.1)
(Reversal) recognition of share-based payment expenses	(0.8)	0.8	(1.6)	-200%		(0.2)	0.2	(0.4)
Government financial assistance	(0.3)	(1.8)	1.5	-83%		0.0	0.0	0.0
Adjusted net profit (loss) for the year (non-IFRS)	(8.5)	25.5	(34.0)	-133%		(1.6)	5.3	(6.9)

Net profit in 2022 was RMB4.0 million (approx. CAD0.8 million), a decrease of RMB17.7 million (approx. CAD3.4 million), or 81%, from RMB21.7 million (approx. CAD4.2 million) in 2021. Net profit in 2022 included certain adjusting items. On a comparable basis, after excluding the gain of RMB11.4 million (approx. CAD2.2 million) in fair value change on derivative financial instrument of loan discharge agreement in respect of the commitment by the estate of Mr. Lin to subscribe for common shares under a related party loan (please refer to the Related Party Transaction section of the MD&A for more details), reversal of share-based payment expenses of RMB0.8 million (approx. CAD0.2 million) and the non-recurring government financial assistance of RMB0.3 million (approx. CAD0.0 million), the Company reported an adjusted net loss of RMB8.5 million (approx. CAD1.6 million) in 2022, a decrease of RMB34.0 million (approx. CAD6.9 million), or 133% from an adjusted net profit of RMB25.5 million (approx. CAD5.3 million) reported in 2021.

In millions	2022	2021	Change	%		2022	2021	Change
(except for % figures)	RMB	RMB	RMB			CAD	CAD	CAD
Continuing Operations
EBITDA for the year	76.0	77.4	(1.4)	-2%		14.7	15.0	(0.3)
Adjusting items
Fair value change on derivative financial instrument	(11.4)	4.8	(16.2)	-337%		(2.2)	0.9	(3.1)
(Reversal) recognition of share-based payment expenses	(0.8)	0.8	(1.6)	-200%		(0.2)	0.2	(0.4)
Government financial assistance	(0.3)	(1.8)	1.5	-83%		0.0	0.0	0.0
Adjusted EBITDA for the year	63.5	81.2	(17.7)	-22%		12.3	16.1	(3.8)

EBITDA in 2022 was RMB76.0 million (approx. CAD14.7 million), a decrease of RMB1.4 million (approx. CAD0.3 million), or 2% from RMB77.4 million (approx. CAD15.0 million) in 2021.

On a comparable basis, the adjusted EDITDA in 2022 was RMB63.5 million (approx. CAD12.3 million), a decrease of RMB17.7 million (approx. CAD3.8 million), or 22%, from RMB81.2 million (approx. CAD16.1 million) in 2021.

Basic earnings per share (“EPS”) in 2022 was RMB0.26 (CAD0.05) per share. Adjusted loss per share in 2022 was RMB0.13 (CAD0.02) per share (non-IFRS).

As we expect the economy will start to recover after the Chinese government lifted the COVID-19 restrictions completely at the end of 2022, our Group will return back to business-as-usual stage. We believe we could see gradual improvements in our financial performance in the coming years. Meanwhile, we will focus on the integrated smart energy segment and smart mobility segment of the Company and continue to expand the businesses in China and transition clean energy business as an integrated energy player. This will be achieved via cooperating with our strategic partners and valuable resources in the related sector.

Chairman statement

Ann Siyin Lin, CEO and Chair of the Board, states that:

As the COVID-19 situation continued to worsen across China and affect all sectors and industries, the Company reported an adjusted net loss of RMB8.5 million as compared to an adjusted net profit of RMB25.5 million in 2021. This was mainly due to two periods of outbreaks of COVID-19 in 2022, of which the lockdown measures severely affected the demand for our natural gas and clean energy utilities in Sanya. However, notwithstanding that the economy was at the bottom since the pandemic started, the Company made some remarkable progress and solid growth in the integrated smart energy and smart mobility segments. The Haitang Bay Integrated Smart Energy Project signed more new clients this year. In addition, the Company signed and secured new EV taxis customers in Sanya City, and expanded the battery swap business in the Beihai City of Guangxi Province. This, in time, could help to improve the financial performance of the Smart Mobility segment.

Following the Government’s policy to remove all COVID-19 restrictions and control measures at the end of 2022, it was anticipated that the market would start to recover from the economic downturn, and people would return to their normal daily activities. I believe this could help with our initiative to work towards a turn-around and to this end, we have made strategic plans to reposition our clean energy segment to continue to grow in this energy transition era.

The audited consolidated financial results and Management’s Discussion and Analysis (MD&A) can be downloaded from www.SEDAR.com or from the Company's website at www.cfenergy.com.

About CF Energy Corp.

CF Energy Corp. is a Canadian public company currently traded on the Toronto Venture Exchange (“TSX-V”) under the stock symbol “CFY”. It is an integrated energy provider and natural gas distribution company (or natural gas utility) in the PRC. CF Energy strives to combine leading clean energy technology with natural gas usage to provide sustainable energy to its customer base in the PRC. In 2009, CF Energy was recognized as being one of China’s the Top Ten Most Influential Brands in the Natural Gas Industry and in 2019, ranked amongst the 2019 TSX Venture 50 top performers on the TSXV for the 2018 year.

CONTACT INFORMATION

Corporate Investment RelationsInvestor.relations@changfengenergy.cn

Charles WangExecutive Assistant to CEO & Chair of the BoardZhaoyu.wang@changfengenergy.cn

Frederick WongDirector of the Boardfred.wong@changfengenergy.cn

Mike LiuVP Capital Marketmike.liu@changfengenergy.cn

Forward-Looking Statements

Certain statements contained in this news release constitute forward-looking statements and forward-looking information (collectively, “Forward-Looking Statements”). All statements, other than statements of historical fact, included or incorporated by reference in this document are Forward-Looking Statements, including statements regarding activities, events or developments that the Company expects or anticipates may occur in the future (including, without limitation, no significant adjustments to the gas selling price and charges for related services imposed by the relevant PRC government, the tourism industry continues to recover from COVID-19 impact and no delay in the development of the electric vehicle battery swap stations or the Haitang Bay Integrated Smart Energy Project). These Forward-Looking Statements can be identified by the use of forward-looking words such as “will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “believe” or “continue” or similar words or the negative thereof. No assurance can be given that the plans, intentions or expectations or assumptions upon which these Forward-Looking Statements are based will prove to be correct and such Forward-Looking Statements included in this news release should not be unduly relied upon. Although management believes that the expectations represented in such Forward Looking Statements are reasonable, there can be no assurance that such expectations will prove to be correct. Such Forward Looking Statements are not a guarantee of performance and involve known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, performance or achievements to differ materially from the anticipated results, performance or achievements or developments expressed or implied by such Forward-Looking Statements. These factors include, without limitation, no significant and continuing adverse changes in general economic conditions or conditions in the financial, tourism, and gas distribution and electric vehicle markets or delays in the development of key projects. Readers are cautioned that all Forward-Looking Statements involve risks and uncertainties, including those risks and uncertainties detailed in the Company’s filings with applicable Canadian securities regulatory authorities, copies of which are available at www.sedar.com. The Company urges readers to carefully consider those factors. The Forward-Looking Statements included in this news release are made as of the date of this document and the Company disclaims any intention or obligation to update or revise any Forward-Looking Statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities legislation. This news release does not constitute an offer to sell or solicitation of an offer to buy any of the securities described herein and accordingly undue reliance should not be put on such. This news release contains future oriented financial information and financial outlook information (collectively, "FOFI") (including, without limitation, statements regarding expected average production), and are subject to the same assumptions, risk factors, limitations and qualifications as set forth in the above paragraph. The FOFI has been prepared by management to provide an outlook of the Company's activities and results, and such information may not be appropriate for other purposes. The Company and management believe that the FOFI has been prepared on a reasonable basis, reflecting management's reasonable estimates and judgments, however, actual results of operations of the Company and the resulting financial results may vary from the amounts set forth herein. Any FOFI speaks only as of the date on which it is made, and the Company disclaims any intent or obligation to update any FOFI, whether as a result of new information, future events or results or otherwise, unless required by applicable laws.

Non-IFRS Financial Measures

This news release contains financial terms that are not considered in the International Financial Reporting Standards ("IFRS"): EBITDA, Adjusted EBITDA and Adjusted Net Profit (Loss). These financial measures, together with measures prepared in accordance with IFRS, provide useful information to investors and shareholders, as management uses them to evaluate the operating performance of the Company. The Company's determination of these non-IFRS measures may differ from other reporting issuers, and therefore are unlikely to be comparable to similar measures presented by other companies. Further, these non-IFRS measures should not be considered in isolation or as a substitute for measures of performance or cash flows prepared in accordance with IFRS. These financial measures are included because management uses this information to analyze operating performance and liquidity.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.